USDTRY continues its trip to 2018 highs as Turkey has now surpassed China as the country with most coronavirus infections outside the U.S. Turkey reported today 86,000 confirmed cases with 2015 deaths. Turkey avoided a full lockdown over the coronavirus outbreak because of its possible cost to the country’s economy. Turkey already had big problems in the economy, and the coronavirus crisis just made things worst.
The central bank of Turkey cut several times the interest rates the last months, and now the basic rate stands at 9.75%. The government announced a 100 billion-lira relief package to help keep the Turkish economy on its feet. CBRT started a 90-day repo auction up to 10 billion liras and an interest rate of 8.25% about 150 bps below its policy rate. Turkey’s economy return to growth in the second half of 2019, in the fourth quarter the growth was at 1.9%, but many analysts now expect a sharp contraction in the second quarter of 2020.
USDTRY is 0.18% higher at 6.9415, as the bullish momentum accelerated in March with gains over 14% the last four weeks. The technical picture is bullish for the pair, and a break above the 7 mark looks possible. Traders must be cautious as the pair hovers in overbought levels and some aggressive profit-taking can’t be ruled out.
On the upside, the first resistance for USDTRY stands at 6.9427 the daily high. The next hurdle awaits at 6.9593 the high from April 16 which guards the 7.000 psychological mark.
On the other hand, first support for USDTRY stands at 6.8777 the daily low. If the USDTRY pair breaks below, the next support level stands at 6.8326 the low from Friday’s trading session. A break below might test 6.7738 the low from April 14.